Council votes to put local bids first

By Josh Baugh :
March 21, 2013
: Updated: December 31, 1969 6:00pm

Beginning in May, local businesses will get preferential treatment in some city contracts that use low bids — meaning that bids could be as much as 3 percent higher than a non-local offer and still win.

The City Council approved a “local preference program” Thursday. State law adopted in 2011 by the Texas Legislature makes the new ordinance possible.

Mayor Julián Castro believes the proposal will help bolster the local economy, and said the city must ensure local businesses know of the effort.

“We ought to articulate this out there and message it in the community,” he said.

Companies are considered local bidders if they either are headquartered within San Antonio's city limits or meet several other conditions, including having at least 100 employees working in the Alamo City, or 20 percent of their workforce for smaller businesses. They also must have been in the city for at least a year.

Qualified bidders can receive preference under the ordinance for contracts for goods and supplies, nonprofessional services and construction.

Under the state law that allows for local preference, San Antonio could select local bidders whose offers are as much as 5 percent higher than the lowest nonlocal bid. But the ordinance the city adopted Thursday calls for a lesser differential of no more than 3 percent difference.

On contracts for goods and supplies, the local preference would apply on contracts worth $50,000 or more. A local bidder could be as much as 3 percent higher than the lowest out-of-town bidder and still win the contract.

For nonprofessional services, local preference could be used for contracts ranging in size from $50,000 to $500,000. Construction contracts between $50,000 and $100,000 would also fall under local preference.

The city's chief financial officer, Ben Gorzell, told the council Thursday that contracts in that range are few and far between.

Rick Aleman, founder and president of San Antonio-based Selrico Services, said he lost a few contracts in Houston even when his firm was the low bidder because of the “Hire Houston First” program, enacted under the same state law.

“We have since stopped bidding there,” he said.

Still, he supports the initiative. “I'm totally for this ordinance to help local, small businesses,” he said. “When you're first starting out, you have a business plan, but it's more of a dream.'

Aleman said that if the city had such a program when he was first starting out, his company would have grown much faster.

Economist Steve Nivin said he believes that in the medium- and long-term, the practice will benefit San Antonio's economy.

“It's my belief that it does help the local economy,” he said. “Any local economy is driven by small-business creation and growth to a large extent. Those types of programs, I've seen myself, help these businesses get started and help them grow.”

What the city may lose in paying slightly higher bids, it will make up in job development and a stronger local economy, Nivin said.

The local preference policy won't apply to federally funded contracts and several other types that are limited by state law. It also can't be applied to certain types of professional services, such as architecture, engineering, land surveying and real estate appraising, Gorzell said. jbaugh@express-news.net